Taxes

Closing budget deficits is not always the optimal fiscal policy in the short term  or the medium term. Instead, budgets should simply be seen as a tool with which to boost living standards. Sometimes policy needs to move the budget toward a deficit to achieve this; at other times, the budget needs to be moved closer to a balance or surplus.

Reducing budget deficits is too often presented as a key budgetary challenge. Defining fiscal policy this way in the present economic environment, however, is simply bad economic analysis. Instead, the most pressing economic task should be viewed as finally securing a durable return to genuine full employment.

Publications

Overhaul: A plan to rebalance Ohio’s income tax

Policy Matters Ohio outlines here a set of changes to the state income tax—the only major tax based on the ability to pay—that will bolster our ability to make key investments in education, human services and local governments. It will begin to reverse the slant of our tax system against low- and middle-income Ohioans—yet because state and the recent federal tax cuts have been so enormous, few of even the richest residents will be paying more overall when our proposed increases are added to recent cuts.

U.S. tax law is a boon to the affluent

A new analysis of the tax law Congress passed last December shows that it will shower benefits on the most affluent Ohioans – and that making its temporary provisions permanent will add to their gains, while providing much more modest savings for most residents.

Seattle taxes ranked most unfair in Washington — a state among the harshest on the poor nationwide

A new report finds that even in Washington — a state whose tax system has been called the nation’s most unfair to the poor — Seattle manages to stand out from the pack.

The report, published this week by the Seattle-based Economic Opportunity Institute (EOI), a liberal think tank, evaluated the tax burdens for households at various income levels in 15 Washington cities. Among those cities, the report found Seattle’s taxes to be the most regressive — in other words, hard on the poor and easy on the rich.

Who Really Pays: An analysis of the tax structures in 15 cities throughout Washington State

Many Washingtonians feel they are heavily taxed. They are – if they’re working class or middle class. Wealthy residents pay a tax rate many times lower than the rates other people pay. But due to our opaque tax system, it’s hard to understand how much we pay in taxes, or how much other people are.

This report compares the tax obligations of households at the $25,000, $50,000, $75,000, $100,000, $150,000 and $250,000 income levels in Bellevue, Bellingham, Everett, Federal Way, Kent, Olympia, Pasco, Pullman, Renton, Seattle, Spokane, Tacoma, Vancouver, Wenatchee and Yakima. In Seattle, the combination of state and local taxes results in a system which relies much more heavily on taxes on the people least able to pay, while not imposing significantly higher taxes on the wealthy.

This report also compares job growth in states and cities with their income tax structures and effective tax rates on wealthy households. In neither case is there any correlation.